Analytics Exercise 18-1 (Algo)

Starbucks has a large, global supply chain that must efficiently supply over 17,000 stores. Although the stores might appear to be very similar, they are actually very different. Depending on the location of the store, its size, and the profile of the customers served, Starbucks management configures the store offerings to take maximum advantage of the space available and customer preferences.

Starbucks' actual distribution system is much more complex, but for the purpose of our exercise let's focus on a single item that is currently distributed through five distribution centers in the United States. Our item is a logo-branded coffeemaker that is sold at some of the larger retail stores. The coffeemaker has been a steady seller over the years due to its reliability and rugged construction. Starbucks does not consider this a seasonal product, but there is some variability in demand. Demand for the product over the past 13 weeks is shown in the following table. (week 1 is the week before week 1 in the table, 2 is two weeks before week 1, etc.).

Management would like you to experiment with some forecasting models to determine what should be used in a new system to be implemented. The new system is programmed to use one of two forecasting models: simple moving average or exponential smoothing.

WEEK	5	4	3	2	1	1	2	3	4	5	6	7	8	9	10	11	12	13
Atlanta	48	33	32	56	33	32	46	35	33	54	28	20	58	45	35	26	57	42
Boston	57	28	48	44	35	33	33	45	43	45	48	54	20	63	44	32	45	52
Chicago	52	23	62	42	42	45	33	26	50	47	69	65	30	24	95	34	44	46
Dallas	38	29	35	58	41	27	28	35	38	47	62	68	62	47	40	35	40	43
LA	42	42	46	38	36	36	42	44	46	46	66	42	35	39	42	45	50	50
Total	237	155	223	238	187	173	182	185	210	239	273	249	205	218	256	172	236	233

a. Consider using a simple moving average model. Experiment with models using five weeks' and three weeks' past data. (Round your answers to 2 decimal places.)

3-week MA

5-week MA

b. Evaluate the forecasts that would have been made over the 13 weeks using the overall (at the end of the 13 weeks) mean absolute deviation, mean absolute percent error, and tracking signal as criteria. (Negative values should be indicated by a minus sign. Round all answers to 2 decimal places. Enter "MAPE" answers as a percentage rounded to 2 decimal places.)